Thursday, February 11, 2010

Anthem Blues

I've got a bad case of the Anthem blues. It's bad enough that I've been sick at home for more than a week. Imagine how I felt when I opened the letter this week from Anthem, my health insurer, and learned my premiums are going to increase 39% beginning March 1. I've had an Anthem policy since 2003. Every year that I've had this policy (with a $2,500 deductible) the premium has increased by more than 10% a year. With this latest increase, my premium will have increased more than 300% from the first policy I purchased as a self-employed person in 2003. Anthem blames a shift in demographics and rising medical costs for the increase. All I know is that Wellpoint, the parent company of Anthem, is making huge profits and the executives are passing out huge bonuses to themselves. What particularly angers me is that Anthem came about because a group of insiders working for the former nonprofit were allowed to convert a public benefit corporation into a private company and, in effect, steal the assets of the former nonprofit. All of those insiders are now multi-millionaires.

I'm no fan of Obama's health care plan, but I can assure you the actions of Anthem and other companies like it are only fueling pressure for a government take-over of our health care system. I frankly think the executives at Wellpoint are entirely comfortable with a government take-over of our health care system. Instead of selling insurance policies, Wellpoint hopes to get billion-dollar contracts from the government to help run the government plan. Those who oppose Obama's plan need to come up with a real alternative that does something to fix the mess in which we find ourselves. And don't bring up tort reform. It's no silver bullet. Indiana has had the most restrictive caps in the nation on medical malpractice claims for decades and it has done next to nothing in terms of holding down health care costs. I could go on, but I'm feeling too sick to write further.

21 comments:

Diana Vice said...

I got the same letter last month. It's an annual tradition for Anthem to send it out to their customers. Maybe it's time to start shopping around.

Doug said...

I feel your pain, Gary. As a family, we had Anthem for several years. Following an epic (and, thankfully successful) battle to get them to pay for a non-elective C-section during my daughter's birth coupled with the insane premium increases you mention, we decided to go with a company with lower premiums but coverage that tends toward the illusory.

If I weren't a lawyer with a buddy who is a doctor willing to give me crash medical advice, I'm pretty sure we would have been screwed with that C-section.

varangianguard said...

I thought that Anthem increase was just in California. Ouch.

I hope you recover soon from whatever it is that has you down. Getting tougher to shake stuff off these days it seems.

Indy Student said...

Gary,
We do have a problem with healthcare and the cost. It's good that you, a conservative, recognize that there is a problem. But is there a solution that can be applied to the entire nation while still following conservative principles of small government?

You mentioned, during the Wishard referendum, that instead of building a hospital and shuttling all the poor and uninsured there, the county could just give everyone a health care voucher and allow them to use it at any hospital in the county. Could a solution like this be instituted nationwide?

Wilson46201 said...

Get well soon !

dcrutch said...

More than one analysis (The Economist comes to mind), says we have to have pricing up-front from the industry. There's too much opportunity to hide too many things without it. Shining a light on costs will bring-up other important topics that lurk, like illegal immigration, the Hippocratic Oath, and the "non-profit" status of hospitals.

Competition across state lines without mandates: If all we have are medical feudal kingdoms with little competition, why should costs not go skyrocketing? I understand it won't be easy, but somehow non-uniform trucking is conducted in 50 states. We'll pay for having a bunch of varied, tailored plans- but to the tune of a 39% increase in premiums?

If Indiana's tort/malpractice law is so leading edge, then how are we to get other states to follow? I don't want nationalized health care litigation paramaters, but I fear the control of the care itself even more. Cost in legal protection is an undeniable factor. How we are to keep it reasonable?

If D.C. Republicans and others want reform that doesn't degenerate to economic fantasy, they better stop booing from the sidelines and get in the game with what CAN be done. That's a short list, but that's reality. The insurance companies may be calculating they'll profit more from the dormant bill than anything passed that serves taxpayers. There's a reason their industry is first or second in campaign donations.

The other side just returned a shot over the bow.

karma09 said...

At least you are still free to shop around. Give away that freedom to the government, and you'll end up w/ the same costs through taxation, and no where else to go, and legal penalties if you try.

The historical accident of employer-based insurance has caused this mess, by eliminating the downward pressure that a real market exerts on virtually every other product or service.

You don't bring a 3rd-party intermediary to buy a car, or even your favorite peanut butter. The fact that the employer-based system does introduce this factor goes a long way towards explaining why all things medical keep going up -- because nobody shops, because somebody else cuts the check.

Choose freedom. The closest thing I've seen to that are health savings accounts, that create that exact incentive -- to shop before you buy. A government take-over, for any reason, is the opposite of that freedom. And like every other program the government has sponsored, you won't get efficiency or effectiveness, just more red-tape and interference.

Hang in there Gary, we need independence and freedom focused individuals.

Michael said...

A 2500 deductible is way too low. Take the deductible to about 10k. The money you save in premiums can be used to pay out of pocket for routine care. You will in all likelihood save money.

The nut that needs cracked in this healthcare debate is getting people weaned off of relying on third parties to pay their routine health care costs. People need to pay out of pocket. That way they (and you) can shop around to get better deals on check ups, procedures etc. Cash paying customers are going to be the new target for health care providers. Costs will come down over time as customers come to the table with cash and demand value for their money. Plus, many providers will not have to take insurance as much and can save costs that way.

The American Bar Association has coverage available at 10k to 25k deductibles and about 2mil lifetime ocverage that costs less than 100 a month.

Michael said...

Indy STudent... a simple free market approach would in fairly short order (5-10 year or so) effect a significant reduction in health care costs. Remember that health insurance is not for the purpose of getting health care. It is for the purpose of preventing financial ruin. Or should be.

So people should be able to buy any kind and level of health insurance coverage they want that an insurance company anywhere in the country is willing to buy. There should be no community rating. So if I want to buy a 10k deductible policy that excludes pregnancy (i am a guy) or AIDS treatment or mental health treatment, or broken bones or whatever I should be free to buy such a policy if a company has it to sell me.

Poeple shoudl be able to tailor the coverage they want and be able to buy it like people buy auto coverage online.

This way, you would have low premiums, and plenty of cash to shop for and pay for routine care. If you have a car accident or heart attack, you are covered.

This way, costs for routine care would come down over time which would benefit everyone who now has to pay less for shots, checkups etc. The market will have driven those costs down, because people are being more judicious wiht their own money.,

Young healthy people would be more likely to get coverage since it would cost a lot less and smart young people would wnat to have the coverage against a catasrophic accident.

This type of coverage is not available now because most states require all policies to cover everyting... which make the insurance cost too much.

Allow coverage to be tailored to fit customer demand, and allow it to be sold all across the country would do wonders to bring costs down.

Adding another third party payor to teh mix (ie the govt) and you have a recipe for higher costs for health care. Standard economics..... more dollars chasing the same or less goods and services.

Same reason why college costs are so high as well.

interestedparty said...

I thought I heard on the news that the industry says the reason for the premiums going up is that young heathy people are forgoing insurance leaving the less healthy who really need the coverage -- therefore the healthcare "costs" are rising due to the remaining insured's needing to be treated more often and more expensively. There are people who are facing financial ruin without insurance. I know some of them. I hope they and everyone can hold on until this mess we call a system is figured out.

artfuggins said...

A healthcare crisis is only a crisis when it affects the individual talking.

Citizen Kane said...

Thanks Michael for your sane and sober comments.

spooknp said...

A close relative of mine works for Wellpoint. They don't care if government takes over healthcare. My relative told me that the government would use private entities to run the program. The only thing that will happen is 1/2-3/4ths of Anthem employees will likely lose their job, depending on what the contract entails. This is why we will never have a true government ran single payer system. The Democrats don't want a government unit to run healthcare. That would mean that everyone in that organization would make less than the President for sure. Democrats and Republicans alike want public-private partnerships for their friends, family members, and themselves. These will allow for pay much higher than true government job pay.

Cato said...

"Tort reform" is an egregious misnomer. What Republicans attempt to call "reform" is nothing but a shameful means of cost shifting to the consumer and profit maximizing for the service providers and their insurance companies.

It's no more "reform" than the Patriot Act is patriotic.

Shorebreak said...

If I were an insurance company and I didn't care about limited government, here's what I would do:

I'd make a backroom deal with the banks who finance our federal spending. I'd tell them that if they can convince their representatives (whom finance has placed in the White House and in Congress) to promote a national health plan, I will agree to significantly lower my rates... if the government chooses me as their provider to roll out a national health system.

I might even meet with a few other healthcare CEO's to work the deal collectively, or maybe I'd ask the finance companies to help me buy out the competition and consolidate the big names in health insurance under just a few organizations.

Big finance would get more tax dollars from the taxpayers, since our tax dollars go towards the interest payment on the loan. And my health insurance company would now be earning profits that are legislated, securing a gaurunteed profitable future for them.

The only outwardly public activity that I would need to conduct would be to continue raising my rates while reducing my services. Eventually, the public will demand a government solution, which I will pretend to dislike, but will be glad to implement.

If there are health insurance and big finance who don't care about limited government, and they are NOT trying this approach, they are a bunch of idiots. If I had no ethics, it's an approach that I would have started several years ago since it's win-win for me and for the banks who control policy.

I hope that helps explain a few unanswered questions.

Maine said...

Cato is correct about the cost shifting, but the cost shifting is not just to individuals but to government (taxpayers) as well, ie. Medicaid. The medical malpractice limits for someone who is severely injured/disabled in Indiana force many people to seek Medicaid to cover their ongoing medical expenses.

Erich said...

The free market is the only possible solution to health care. The free market solution is always efficient, always rational, and always fair.

The Free Market Health Care Solution (TM) would allow the poor to auction their body parts in exchange for health care.

Loser A needs $10,000 worth of medical care to meet a high quality, high deductible plan.

Loser A sells a put option for $10,0000.

Winner A would buy said put option for $10,000. Loser is treated and Winner has a put option credit of $10,000.

The put option would allow for body parts. The exercise price gets a bit tricky, and would have to be resolved through auction.

Is $10,000 the fair value of a 20 year old kidney or a 40 year old kidney? Only the free market can be trusted with such a decision.

I hope this explains how the free market can and should efficiently provide medical care to everyone.

Erich said...

I suppose those should be call options.

It is hard to reform health care in this simple text box on a Saturday morning.

But, I am confident people now understand the free market is the only possible solution.

Lord Peter said...

@Erich -

Any system which says that the poor will die while the rich survive is not fair.

Some people's religious faith in the free market is downright scary.

Marycatherine Barton said...

Knowing their high profit margin, I too am outraged by the Anthem's high increase in the price of its premiums. Also knowing the corporate takeover of health care providers, I agree with Lord Peter (here) and Paul Craig Roberts, and get the heebee-jeebees contemplating fair market analysis re healthcare. Since I also think Shorebreak (here) is correct, I still am in support of the healthcare legislation introduced by the Honorables Dennis Kucinich and John Conyers last year.

Wilson46201 said...

Congressman André Carson, representing Gary Welsh, Diana Vice and many other Hoosiers:

http://www.youtube.com/watch?v=38j1qZiG32g